Comments on: U.S. Dollar Facing Imminent Collapse

By: Dean Morel

Dean Morel — Mon, 23 Nov 2009 10:37:11 +0000

Thanks for pointing out that one aRRAN. If none of them were supportive then I’d be worried. The chart simply displayed the timeline from google for “collapse of US Dollar” as per the image title.

By: aRRAN

aRRAN — Mon, 23 Nov 2009 08:12:04 +0000

You know, if you have a look at some of the articles that come up for that graph you find that they aren’t as supportive as indicated.

I like the last couple of paragraphs of this one:
http://query.nytimes.com/gst/abstract.html?res=9B05E2D9133BEE32A25757C0A9649C946195D6CF

By: Dean Morel

Dean Morel — Wed, 11 Nov 2009 11:14:09 +0000

thanks a lot, great information. A lot of people use the Chinese electricity consumption as the least fudged indicator out of China.

I’m sure you saw the yuan announcement
BEIJING (Reuters) – China said on Wednesday it will consider major currencies in guiding the yuan, suggesting a departure from an effective dollar peg that has been in place since the middle of last year.
The reference to a new set of benchmarks for determining the value of the yuan holds out the possibility of a departure from recent practice, which has seen the currency held steady since mid-2008 around 6.83 per dollar.
“Following the principles of initiative, controllability and gradualism, with reference to international capital flows and changes in major currencies, we will improve the yuan exchange rate formation mechanism,” the central bank said in a 46-page monetary policy report.
It was the first time since the landmark revaluation and launching of forex reforms in July 2005 that the People’s Bank of China has strayed from the language of keeping the yuan “basically stable at a reasonable and balanced level” when discussing future forex reforms in such quarterly reports. http://news.yahoo.com/s/nm/20091111/bs_nm/us_china_economy_pboc

By: S

Wed, 11 Nov 2009 10:17:34 +0000

the correlation is high, but the % movement is not the same, although recently it has so the AUD gold price is about the same it was 12 months ago. I find it a really good secondary cross to think about when I am thinking of where AUD-USD is going. Everyone’s got their own little pet cross, Alan Kohler interestingly thinks Chinese electricity consumption is a forward indicator of AUD. This has only been in the last 2 years and it might be a coincidence. The AUD-Gold correlation is a multidecade one.

By: Dean Morel

Dean Morel — Tue, 10 Nov 2009 00:23:05 +0000

correlation between AUD and gold (0.7-0.8)
Surely that would break down if gold reached the heights many wise men are now talking up.

IF USD:AUD gets to 1.20 I’ll be reversing my short USD position! Depending of course on what is going on at that point. Just to be clear I’m actually net long USD at the moment once you add in equity exposure. The US has been my primary investing market since around 1997. When I returned to Australia in 2004 I decided to entrust our “Australian Operations”, i.e. investing in Australia, to a small caps value based fund manager. I only added an Australian investing focus in 2008 and completely took over managing new Australian investments in early 2009.

I know more about more US companies and have much better resources at my finger tips for those than I do for Australian equities. However, since taking over ‘Australian Ops’ I’m enjoying home court advantage, I love the higher dividends and franking credits and like no Fx hassles.

By: Dean Morel

Dean Morel — Mon, 09 Nov 2009 23:58:39 +0000

S, I’ll be writing a longer post on Telstra sometime soon. In this post http://www.fusioninvesting.com/2009/10/fusion-portfolio-and-smsf-performance/ you’ll find this picture I haven’t sold any Telstra since then.

I also own Telstra outside of super at around the same level. I like an almost 10% after tax yield with a good shot at 10% added annual capital gain over a number of years or a 30% one year capital gain. Downside is as you say S, a crazy government.

My last comment on TLS was “The opportunity to buy a this stalwart at discount prices has arisen due to regulatory uncertainty and now the threat of structural separation of Telstra’s wholesale and retail divisions.” That was a few weeks ago, but little has changed.

Funds have been selling as they’re desperate to chase performance and Telstra was the least likely to show capital appreciation until after regulatory uncertainty is cleared up.

By: S

Mon, 09 Nov 2009 08:21:49 +0000

Another interesting tidbit that always amazed me was the correlation between AUD and gold (0.7-0.8). In terms of currency exposure, I think you can’t go wrong by remaining predominantly in the currency you have your obligations in.

For me there is no reason to get foreign currency or international investment exposure unless I have a very strong directional view that AUD will depreciate. At the end of the day, I intend to remain living here, so all my expenses are in AUD, so international exposure is risk with limited upside currently. BRIC funds may or may not outperform XAO. AUD/XAO are currently pretty much play on risk/China and world growth in any case.